NonCents: Do We Still Need The Penny?

NonCents is the work of a group of design students from the University of Washington. They have created an exhibition that uses interactive parking meters and an indoor display to explore reasons why the penny should be removed from circulation.

The Wall Street Journal recently delved into this issue when it published an article about the newly redesigned penny. The article is clearly in favor of abolishing the one cent piece, citing production costs as the main reason.

They explain:

In a 2006 editorial in the Journal, Harvard economist Greg Mankiw made a simple case for getting rid of the penny. “The purpose of the monetary system is to facilitate exchange, but I have to acknowledge that the penny no longer serves that purpose. When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful. I know that some people will be upset when their favorite aphorisms become anachronistic, but a nickel saved is also a nickel earned,” he wrote.

But the penny isn’t just useless, it’s also costly. Beyond the money spent designing and printing these new pennies, the unit itself costs more to make than it’s worth. In an excellent article in last year’s New Yorker, David Owen took an in depth look at the penny. “Producing a penny now costs about 1.7 cents. Since the Mint currently manufactures more than seven billion pennies a year and “sells” them to the Federal Reserve at their face value, the Treasury incurs an annual penny deficit of about fifty million dollars — a condition known in the coin world as ‘negative seigniorage.’ The fact that the Mint loses money on penny production annoys some people, because one-cent coins no longer have much economic utility,” he wrote. “More than a few people, upon finding pennies in their pockets at the end of the day, simply throw them away, and many don’t bother to pick them up anymore when they see them lying on the ground. (Breaking stride to pick up a penny, if it takes more than 6.15 seconds, pays less than the federal minimum wage.)”

Supporters of the penny cite historical and cultural reasons for keeping it. The article doesn’t address the impact on lower income families. Will stores round up their 99 cents? Is the penny still useful to us? Will we then consider removing the nickel? Dime? Quarter?

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